U.S. Indices closed in the red but well off the earlier lows, while T-notes were sold across the curve while the U.S. Dollar was strong. The focus continues to lie on Trump’s tariff letters, with the latest seeing a 35% tariff on Canada, while the EU letter is still expected to be announced before Monday. The inflationary fear aspect of higher tariffs pressured T-notes across the curve with yields bear steepening, resulting in lows seen at settlement amid commentary from Fed’s Goolsbee, who warned rate cuts may be delayed due to Trump’s fresh tariff announcements. Note, there was some pressure in equities after FHFA Director Pulte made a statement cheering on rumours that Fed Chair Powell was resigning, albeit it is not clear where these supposed rumours are emanating from, and Indices pared the initial downside. In FX, the Dollar was bid with the move higher in yields pressuring THE Japanese Yen, while Sterling lagged after soft GDP data. Gold prices surged despite the movement in the Dollar and Treasury yields, with the upside predominantly supported by the uncertainty regarding upcoming EU tariffs. Gold held its bid despite the move from lows in US equities. Oil prices were bid in anticipation of a “major statement on Russia” from US President Trump on Monday. Elsewhere next week, the focus largely lies on US CPI to help gauge the inflationary impact of Trump’s tariffs so far. The Federal Budget in June posted a USD 27 billion surplus, a huge improvement vs the May USD 316 billion deficit and also better than the expected deficit of USD11 billion. While the surplus was not expected via the consensus, keep in mind the analyst forecast range was USD -85 billion to USD 105.5 billion, and the CBO estimated a USD 24 billion surplus. The shift to a surplus was supported by a record high revenue in US gross customs duties, USD 27 billion, +301% due to tariffs. Regarding the report, Oxford Economics noted timing effects have helped produce a surplus last month (likely on tariff revenue preceding OBBB’s tax cuts and spending costs). Ahead, Oxford look for the budget shortfall to dip in FY2025, and recent developments tied to fiscal and trade policy will only reinforce this move lower. Goolsbee the Chicago Fed President warned that US President Trump’s latest tariff threats could delay rate cuts, via a Wall Street Journal interview. He said the threats could spark fresh concerns about inflation and force the Fed to maintain its wait-and-see approach. Meanwhile, on a Moody’s podcast, he said the new round of tariffs makes it messy to truly say how the economy is doing. Goolsbee wants to wait until the anxiety dies down before being comfortable that the US is back on track to a soft landing. He also noted that if they go into an environment where prices start rising again, he will be nervous. Elsewhere, both Oil and Gold surged on Friday closing higher by 3% and 1% respectively. On Saturday President Trump announced a 30% Tariff on both the E.U. and Mexico. So far, the fallout from this announcement has been muted.
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For anyone following my Platinum Service it made 375 points on Friday and is now ahead by 1350 points for July after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 2300 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
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